Secrets of Mental Math

Recently I chanced upon a book “ Secrets of Mental Math” by Arthur Benjamin. Arthur Benjamin is a mathemagician who combines maths and magic in his shows to entertain the audience. There are few videos of him on youtube and TED.

Of late, many children are being trained in Abacus method of fast computations. Children thus trained will be able to do calculations faster. Reactions to this method and outcomes are mixed, from parents.(This observation is from my interaction with limited number of parents in my circle). As I was not very comfortable/carried away by the concept, I did not opt for this for my children.

But I had a feeling that the ability to calculate can be inculcated and improved. I found this book as a pleasant surprise in that direction.

In the book the author explains how calculations can be made faster with the help of simple ways. The method is in line with theory a child learns in school. So this helps understanding.

This can be read by a 5^th grader with the help of an elder.

This is a good exercise between a parent and child and clears some basic mathematics concepts to both.

A useful book.

Hindu Undivided Family or HUF

Hindu Undivided Family or HUF is a legal entity. It comes into existence when one marries and starts a family. A HUF consists of husband wife and their children. Husband is called Karta of the HUF. He looks after the affairs of the HUF. Other family members are called coparceners.

This can be used as a tool for wealth creation and wealth preservation. HUF can do this by reducing the taxes, if properly used.

For tax purpose, HUF is a separate entity.

As indicated, HUF comes into existence when one marries. HUF can acquire assets in various ways. Main one of them is through a will or inheritance. For example, a grad father can bequeath a house to the HUF of son or grand son. When this is done, such gift belongs to all coparceners and all the coparceners have a right on HUF assets or income arising out of them.

There is an interesting and detailed post on this in Jagoinvesotr blog. One can see that by clicking the following link.

http://www.jagoinvestor.com/2011/10/huf-creation-and-saving-tax.html

As indicated, HUF is a separate legal and tax entity.

Procedure to create HUF

One has to apply for a PAN card for his HUF. One can apply online on NSDL site for a HUF PAN card. But a copy of signed application along with document proofs as specified in their website are to be sent as advised on the website. Aftert his, PAN card will be home delivered in 1-2 weeks time.
Then with this pan card and necessary address proofs, one can open an account for his HUF in  a bank.

Managing HUF

A person opening HUF account will be Karta of the HUF. When Karta is signing on behalf of HUF, he has to necessarily stamp stating that he is Karta.
One needs to take precautions while getting assets and funds for HUF. One(any of the co parcenors) should not gift/donate funds to his HUF. HUF cannot take any gifts >50000(total value for year).
However, (karta on behalf of) HUF can borrow from others and invest these monies nd pay interest to the lenders.

HUF corpus can be invested by Karta for better returns. On HUF FDs Karta can give form 15H to avoid TDS, if HUF income is within taxable limits.
Some ideas to invest through HUF.

1.      Get 50000 every year and build up an investible corpus

2.      Borrow from relatives and invest in avenues as per risk appetite. Pay reasonable interest and retain the differential.

3.      HUF can invest in 80C instruments and get additional tax rebate for HUF corpus.

As one explores, one can get many more options based on one’s knowledge and corpus level.

Thus HUF provides a valuable tool for creating and maintaining family wealth. 

Thoughts on Retirement

Last Sunday I attended an investor training camp. There eminent speakers spoke about various topics relevant to investors.

One speaker(Mr P V Subramanyam, who runs Subramoney blog) talked about retirement.

That session was very informative and eye opening.

I want to share some points that came out in that session.

One has to plan carefully for retirement. It is not as easy as it appears to be. There are various inputs that are to be considered to crystalize the requirement.

1.      When is one planning to retire.

2.      What is the current corpus available.

3.      What are the likely inflation and returns one can expect.

4.      What is the length of post retirement life one is expecting to live.

5.      What are the current expenses and likely xpenses.

There are other points but considering the above major issues will help one understand the gravity of the issue. Now some explanation on these points is in order.

When is one planning to retire. It is very adventurous and rosy to consider early retirement. Say, when one is 45 or so. If one retires then, his age for which one has to survive on savings will be more to that extent. This is to be factored in. However, if one has plans to do something lucrative and not remains idle, it will soften the impact to some extent.

As life expectancy is increasing and the current life expectancy in India is >70 years, this is a major cause of joy and worry. Joy because one lives longer. Worry because one has to fend for so many more years on one’s corpus.

One thinks that post retirement one’s expenses tend to go down. This may not be universally true. If one has responsibilities and one retires at 50, his expenses tend to increase over time. Also post retirement one has more leisure time and one tends to do something which may cost one. Thus it is a good way to consider equal or slightly more expenses post retirement and that needs to be factored in while taking a decision.

The corpus available currently and liabilities one has, determines one’s cash flow. The higher corpus with less liabilities the better.  

Inflation and returns for an extended period are not tangible. So one can at best take an educated guess.

Thus the input as to how much one needs for retirement is not simple and  one needs to consider many factors to get a reasonable answer.

Based on the same argument, one needs to understand that one needs a big corpus for comfortable retirement and work towards meeting/achieving the same.

Trust this info is useful. Please share your ideas in comments.

Natonal Book Trust

NBT or nationl book trust is a good resource for books for all ages.

The books start from age 3-4, for children who don't know how to read an extends  to books on various topics. I remember initiating my son into reading with some of NBT books.

Books are available in many indan languages. Also books can be ordered online.

All in all, it is a good resource for books. One can try it.